Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we discover how Europe’s economy fared in the first quarter of 2021, in the face of the third wave of the Covid-19 pandemic.
And the breaking news is that France’s economy has returned to growth – and faster than expected.
French GDP rose by 0.4% in the January-March quarter, new figures just released by statistics body INSEE show. Economists had only expected modest growth of 0.1%.
That follows a contraction of 1.4% in the final three months of 2020, as new restrictions hit its recovery.
INSEE reports that household spending rose by 0.3% in the quarter (up from a 5.7% slump in Q4), while “gross fixed capital formation” (business investment) was notably strong, growing by 2.2%.
That’s an encouraging start to the year — suggesting that consumers and companies fared better than thought this year.
Trading Economics
(@tEconomics)France GDP Growth Rate QoQ Prel at 0.4% https://t.co/YZQGQp1rmQ pic.twitter.com/Jcf4I6p2Vi
However, the wider eurozone may still have contracted in the last quarter, with ongoing lockdowns and a slow vaccination programme hampering the recovery.
That would put the eurozone into a double-dip recession (as GDP shrank in the last quarter of 2020). We’ll find out at 10am UK time.
Michael Hewson of CMC Markets explains:
Spain’s economy is expected to contract by -0.5%, after stagnating in Q4, with Italy set for a similar -0.5% contraction, coming on top of a -1.9% contraction in Q4. Germany’s economy is also expected to contract by -1.5%.
This set of numbers is expected to equate to a -0.8% contraction in Q1 for EU GDP, following on from a -0.7% contraction in Q4.
It will be quite a contrast with the US, where GDP grew by 1.6% during the first quarter of the year (we learned yesterday).
Rising vaccinations, a massive round of government stimulus and a steady recovery in the jobs market helped reverse some of the impact of the coronavirus pandemic, meaning the US is expected to see robust growth this year.
Its technology giants are leading the charge, with Amazon reporting blistering figures last night: sales increased 44% to $108.5bn, while it raked in a profit of $8.1bn for the quarter – $2.7bn a month.
We also get new unemployment and inflation data from across Europe, likely to show that joblessness remained elevated in March, while prices rose this month.
Hewson again…
Unemployment levels are expected to remain steady at 8.3% for March, while the latest preliminary April CPI figures are set for another sharp gain, this time to 1.6%, from 1.3% in March.
This will inevitably fuel concerns about inflationary pressures in the euro area given that headline CPI has risen from -0.3% at the end of last year to current levels in less than four months.
With growth data from Mexico and Canada (for February) on the docket, and UK house prices figures, it could be a busy day….
Claus Vistesen
(@ClausVistesen)Strap in for a very busy morning in the Eurozone economic calendar … French Q1 GDP out in a tick, and then the numbers will come out steadily until 11:00 CET.
The agenda
- 6.30am BST: French GDP for Q1 2021
- 7am BST: Nationwide survey of UK house prices
- 8am BST: Austrian GDP for Q1 2021
- 8am BST: Spanish GDP for Q1 2021
- 9am BST: German GDP for Q1 2021
- 9am BST: Italian GDP for Q1 2021
- 10am BST: Eurozone GDP for Q1 2021
- 10am BST: Eurozone inflation for April
- 10am BST: Eurozone unemployment for March
- Noon BST: Mexican GDP for Q1 2021
- 1.30pm BST: Canadian GDP for February
- 1.30pm BST: US PCE inflation report
- 3pm BST: University of Michigan consumer sentiment survey